Correlation Between Asia Pacific and Mobile World

Can any of the company-specific risk be diversified away by investing in both Asia Pacific and Mobile World at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Asia Pacific and Mobile World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Pacific Investment and Mobile World Investment, you can compare the effects of market volatilities on Asia Pacific and Mobile World and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Asia Pacific with a short position of Mobile World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pacific and Mobile World.

Diversification Opportunities for Asia Pacific and Mobile World

0.71

Correlation Coefficient

Asia Pacific  Mobile World

Poor diversification

The 3 months correlation between Asia and Mobile is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Investment and Mobile World Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile World Investment and Asia Pacific is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Asia Pacific Investment are associated (or correlated) with Mobile World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile World Investment has no effect on the direction of Asia Pacific i.e., Asia Pacific and Mobile World go up and down completely randomly.

Pair Corralation between Asia Pacific and Mobile World

Assuming the 90 days trading horizon Asia Pacific Investment is expected to generate 1.72 times more return on investment than Mobile World. However, Asia Pacific is 1.72 times more volatile than Mobile World Investment. It trades about 0.03 of its potential returns per unit of risk. Mobile World Investment is currently generating about -0.08 per unit of risk. If you would invest  790,000  in Asia Pacific Investment on September 13, 2024 and sell it today you would earn a total of  20,000  from holding Asia Pacific Investment or generate 2.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Asia Pacific Investment  vs.  Mobile World Investment

Asia Pacific Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Pacific Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Asia Pacific is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mobile World Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile World Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Asia Pacific and Mobile World

The main advantage of trading using opposite Asia Pacific and Mobile World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Pacific position performs unexpectedly, Mobile World can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Mobile World will offset losses from the drop in Mobile World's long position.

The idea behind Asia Pacific Investment and Mobile World Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.